UK: Recent Authority Of Particular Relevance In The Fields Of International Trade And Transport: Dangerous Cargo

A recent decision of the Commercial Court has affirmed the
distinction between the scope of liability for the shipment of
dangerous cargo under the English common law and under the Hague
and Hague-Visby Rules respectively. Further, as well as helpfully
defining the parameters of liability in each such case, the
decision also grappled with the issue of how the burden of proof
upon a claimant is intended to operate where contractual loss and
damage arises from simultaneous causative breaches of contract by
more than one contractual counterparts.

In The Darya Radhe [2009] 2 Lloyd's Rep. 175,
Tomlinson J. addressed the question of what constitutes a dangerous
cargo for the purposes of both Article IV, rule 6 of the Hague and
Hague-Visby Rules and the common law. The Judge also addressed the
question of what, in circumstances where loss may be suffered by a
claimant as a result of breaches of contract by several independent
contractual counterparts, that claimant must establish in order to
recover against one or more of those counterparts.

Key facts

The Vessel loaded a number of parcels of Soya Bean Meal Pellets
(SBMP) in Brazil for carriage to Iran. The parcels were loaded
across several different holds and shipment was acknowledged by the
carrier (Bunge) by way of several different bills of lading (all on
identical terms). The parcels were shipped by a variety of
shippers.

Prior to the loading of the SBMP parcels, the Vessel had already
loaded (into separate holds) a cargo of maize. That cargo was not
shipped by any of the shippers of the SBMP parcels. By the time
that loading of the SBMP parcels commenced, the loading of the
maize was complete and the holds containing the maize were
closed.

In the course of loading of the SBMP (but not the maize), a
number of live rats were loaded with the cargo. This resulted in
stoppages to loading and lead to delay. However, it was not
possible on the evidence to identify a particular rat with a
particular parcel of cargo. Accordingly, it was not possible to
establish whether any particular rat had been loaded by any
particular shipper. As it was, the number of SBMP parcels was
greater than the number of rats recorded, albeit that the number of
SBMP shippers was less than the number of rats.

Following the completion of loading of the SBMP parcels, the
cargo was fumigated. The consequence of this was that any live rat
that might have found its way into the cargo was killed and
mummified, with the result that it posed no hazard to the health of
the cargo. Thus, to the extent that the rats posed any problem at
all to the cargo, it was purely cosmetic.

Bunge nevertheless contended that, by reason of the shipment of
the rats with the SBMP parcels, it was necessary for the Vessel to
call at Lisbon in order to re-fumigate en route to Iran.
Bunge also contended that it was necessary to despatch a cargo
superintendent to Iran in order to attend the discharge of the
cargo and to guard against any difficulties which might arise from
the presence of the dead rats in the cargo. As it was, the cargo
was discharged in Iran without incident.

Bunge therefore contended that the shipment of the rats had
thereby exposed the Vessel to delay and had thereby resulted in
expense.

The claim

Bunge sought to recover the loss which it was alleged had been
incurred as a result of the delay to the Vessel and the other
expense which resulted from the presence of the rats in the SBMP
cargo.

In this regard, Bunge contended that the various shippers of the
SBMP parcels were in breach of the terms of the bills of lading in
that, in breach of an implied term at common law or Article IV,
rule 6 of the Hague Rules (which were incorporated into the bills
of lading), they had shipped cargo which was dangerous without
giving notice of such danger to the carrier.

The issues

Bunge contended that the shipment of the rats with the cargo
rendered the cargo dangerous. They also contended that, as regards
the burden of proof, it was only necessary for them to establish
that, on the balance of probabilities any one shipper loaded at
least one rat. In that regard, Bunge contended that their claim
succeeded on the basis that there were more rats than shippers and
that, accordingly, a straightforward statistical approach compelled
the conclusion that each shipper had shipped at least one rat and
was therefore liable to Bunge.

The issues were therefore, essentially:

(i) Is a cargo (of SBMP) loaded with a rat, alive or dead, a
dangerous cargo ?

(ii) If so, and if the rats had come on board the Vessel with
the cargo, was it sufficient to show that, on average (comparing
the number of rats with the number of shippers) each shipper must
have shipped a rat, or was it necessary to ask whether there were
rats present in every shipper's cargo, or only some of them,
and if so which?

The judgment

Tomlinson J. concluded as follows:

(i) In order to constitute dangerous goods within the meaning of
Article IV rule 6 of the Hague Rules, goods have to have the
capacity to cause physical damage to the vessel or other
cargo in either a direct or an indirect manner (see Effort
Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998]
1 Lloyd's Rep 337 and [1998] AC 605).

(ii) The implied term at common law contemplates a wider
category of dangerous cargo insofar as it encompasses not only
cargo which may cause physical damage in the sense described above,
but also cargo which (or the carriage or discharge of which) would
lead to the violation of or non-compliance with some municipal law
which is of direct relevance to the carriage or discharge of the
specific cargo in question (see Mitchell, Cotts & Co v
Steel Brothers & Co Ltd [1916] 2 KB 610; Effort
Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998]
1 Lloyd's Rep 337, [1998] AC 605; The Lisa [1921] P
38; Transoceanica Societa Italiana di Navigazione v H S Shipton
& Sons (1922) 10 Ll L Rep 153).

(iii) However, neither Article IV, rule 6 nor the implied term
at common law would recognise as dangerous a cargo which merely
causes delay to the carrier.

(iv) Thus, on the facts found by the arbitrators, the presence
of the rats in the SBMP parcels did not render it dangerous.

(v) Accordingly, there was no breach of contract by any of the
shippers.

(vi) Even if the presence of the rats in the SBMP cargo had
rendered it dangerous and constituted a breach of contract under
the terms of the bills of lading, in order to make a recovery, the
burden on Bunge was demonstrate either that there were rats present
in every shipper's cargo (in which case Bunge would recover
against each shipper) or at least that rats were present in certain
cargoes (in which case Bunge would recover against the relevant
shipper(s).

(vii) As regards the approach to discharging that burden, no
doubt there might be cases where statistical evidence could be
deployed in an effort to prove what on the balance of probabilities
must have occurred. However, in the present case the number of rats
involved was simply too small to permit any valid statistical
approach.

(viii) Furthermore, the fact that certain shippers completed
loading long before others, and in some cases before others had
even started loading, and the fact that certain shippers loaded
more cargo than others, meant that any attempt to show an even
distribution of the introduction of rats over time could not give
rise to an inference that all shippers were responsible for the
introduction of at least one rat: the distribution of any rats in
the parcels of cargo could not be assumed to be even, and it was
possible that, whilst there might be several rats in one parcel,
there would be many parcels which contained no rats.

(ix) Accordingly, Bunge's approach to discharging the burden
of proof was flawed, and it could not have discharged the correct
burden in any event on the evidence.

Insight & analysis

The decision is a helpful indication of the scope of the
dangerous cargo prohibition contained in Article IV, rule 6 of the
Hague Rules and established by way of the ordinary implied term at
common law.

It confirms that, under the Hague Rules, the prohibition is
confined to goods which pose a risk of physical danger to the
vessel or other cargo on board and does not extend to those which
pose a risk of "legal danger", while at common law the
prohibition includes such goods and extends to those which would
lead to the violation of or non-compliance with some municipal law
which is of direct relevance to the carriage or discharge of the
specific cargo in question.

It also underlines the fact that goods which pose a risk of mere
delay to a vessel (e.g. by virtue of an arrest by the receivers on
the basis that the cargo has been damaged or rendered out of
contractual specification) are not dangerous for these
purposes.

Further, the decision illustrates that, in circumstances where a
claimant contends that loss and damage is the consequence of
simultaneous breaches of contract by more than one contractual
counterpart:

(i) The burden remains upon him to establish on the balance of
probabilities that (a) each such counterpart was in breach and that
(b) each such breach caused or contributed to the loss in
question.

(ii) A simple statistical approach to discharging that burden is
unlikely to succeed, save in the clearest of cases in which the
overall number of instances of breach is such as to compel the
inference that each counterpart was in breach and, therefore,
probably did cause or contribute to the loss in question.

(iii) Thus, an averaging approach (i.e. simply dividing the
number of instances of breach among the number of contractual
counterparts) will rarely suffice of itself to discharge the burden
of proof on a claimant in a contractual claim.

Originally published in International Trade and Transport
Law Newsletter, December 2009

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